TotalEnergies says Q1 LNG earnings, sales down

France’s TotalEnergies said on Thursday that the company’s integrated LNG business logged a drop in its adjusted net operating in the first quarter of this year due to lower prices.

The company’s integrated LNG adjusted net income reached about $2.07 billion, a drop of 25 percent when compared to the first quarter in 2022 and down by 10 percent when compared to the previous quarter.

In 2022, the company’s integrated LNG business logged a jump in its adjusted net operating income to $11.2 billion in due to a high demand in Europe.

TotalEnergies said earlier this month that the quarterly results of its integrated LNG business will be impacted by the lower demand in Europe and lower prices.

The company also took a $4.1 billion hit in its fourth-quarter results for the write-down of its stake in Russian LNG producer Novatek.

Overall, the group reported adjusted net income of $6.5 billion in the first quarter, down by 27 percent year-on-year and a drop of 13 percent when compared to the prior quarter.

Compared to the first quarter in 2022, net income increased 12 percent to $5.6 billion.

“TotalEnergies once again demonstrates its ability to generate strong results, posting in the first quarter 2023 adjusted net income of $6.5 billion, cash flow of $9.6 billion, and return on average capital employed of 25 percent, in an environment of lower oil and gas prices. IFRS net income was $5.6 billion for the quarter,” chief executive Patrick Pouyanne, said.

“Integrated LNG delivered adjusted net operating income and cash flow of $2.1 billion, leveraging its integrated global portfolio, in an environment of European and Asian gas prices returning to levels close to Brent parity at $16-17/Mbtu, given the mild winter and high inventories in Europe,” he said.

LNG sales and production

During the first quarter, TotalEnergies sold 11 million tonnes of LNG, down by 17 percent when compared to the year before and a drop of 13 percent when compared to the prior quarter.

TotalEnergies attributed the drop mainly to lower spot volumes, linked to lower demand for LNG in Europe due to the mild winter weather and high inventories.

However, LNG production, excluding Novatek, rose by 7 percent to 4.4 kboe/d in the first quarter from the same quarter last year due to restart of the Hammerfest LNG terminal in Norway in the second quarter of last year, the firm said.

LNG production, excluding Novatek, rose 4 percent when compared to prior quarter as well.

Freeport LNG restart to boost sales

Given the evolution of oil and gas prices in recent months and the lag effect on price formulas, TotalEnergies expects that its average LNG selling price should be between $10-12/Mbtu in the second quarter of this year.

Also, given the high inventory levels at the end of winter, European and Asian gas prices are expected to remain stable in the second quarter before rebounding in the second half 2023, driven by restocking gas in Europe before winter and the demand recovery in China, in a context of limited LNG production growth, the firm said.

Futures markets anticipate prices in the range of $18/Mbtu for winter 2023-24.

For the second quarter 2023, TotalEnergies expects a hydrocarbon production around 2.5 Mboe/d, LNG sales that should benefit from the restart of Freeport LNG, and a utilization rate in refineries up to more than 80 percent given the end of strikes in France.

The company confirmed its guidance for net investments between $16-18 billion in 2023, including $5 billion in low-carbon energies.

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